Monthly Archives: November 2015

In recent years, America’s corporations have created a private system for handling disputes that benefits them greatly while denying consumers their day in court.

Worse, according to a recent series in The Times, that system has become vast and more entrenched as companies increasingly require customers, employees, investors, patients and other consumers to agree in advance to arbitrate any disputes that arise in their dealings with a company, rather than sue in a court of law.

Such forced-arbitration clauses, found in the fine print of contracts, also typically bar aggrieved parties from pressing their claims as a group in a class action, often the only practical way for individuals to challenge corporations. In addition, corporations effectively control the arbitration process, including the selection of the arbitrator and the rules of evidence, a stacked deck if ever there was one.

As if that is not troubling enough, it is extremely difficult to avoid or get out of forced-arbitration clauses and class-action bans, particularly since they were upheld by two misguided Supreme Court decisions in 2011 and in 2013.

From 2010 to 2014, corporations prevailed in four out of five cases where they asked federal judges to dismiss class-action lawsuits and compel arbitration, according to The Times’s articles. People who were blocked from going to court as a group usually dropped their claims entirely, in part because class actions are often the only affordable way to file lawsuits. If successful, they can deter future corporate wrongdoing because even small payouts, multiplied over all similarly mistreated customers, can be very large.

Indeed, faced with arbitration, it appears that most people do not pursue remedies to their grievances at all. Verizon, with more than 125 million subscribers, faced 65 consumer arbitrations between 2010 and 2014, The Times’s report found. Sprint, with more than 57 million subscribers, faced six. Time Warner Cable, with 15 million subscribers, faced seven.

Even more disturbing, the shift away from the civil justice system has gone beyond disputes about money. Nursing homes, obstetrics practices and private schools increasingly use forced-arbitration clauses to shield themselves from being taken to court over alleged discrimination, elder abuse, fraud, hate crimes, medical malpractice and wrongful death.

For the most part, Congress has looked the other way. Federal regulators, however, are starting to fight back. The Consumer Financial Protection Bureau is expected to propose a rule soon to forbid arbitration clauses that ban class actions in cases involving financial services and products. TheCenters for Medicare and Medicaid Services, which is expected to issue updated nursing home regulations next year, is considering a ban on forced arbitration clauses in nursing home contracts.

Reversing the broader trend of forced arbitration, however, will require public outcry loud and long enough to stir the White House and Congress to action. Many people interviewed in The Times’s series did not realize that their right to sue had been lost until they needed it. A common refrain was the disbelief that this could happen in America. But it is happening, and it needs to stop.

Imre Stephen Szalai is the Judge John D. Wessel Distinguished Professor of Social Justice at Loyola University New Orleans College of Law. He is a nationally recognized expert regarding arbitration and serves on the board of the Employee Rights Advocacy Institute for Law and Policy. He wrote the below article for The Hill.

I applaud the New York Times for recently showcasing in a series of articles one of the greatest stains on America’s civil justice system: the forced arbitration of millions of consumer and employment disputes. However, in some respects, these articles do not go far enough to convey how problematic forced arbitration is. And in other respects, these articles go too far and fail to recognize the potential value of arbitration.

There are serious constitutional concerns with forced arbitration. If a corporation or employer drafts an arbitration clause with several one-sided provisions, such as requiring hearings in distant locations, banning all discovery, or requiring a consumer or employee to pay all arbitration expenses, courts could invalidate such provisions a few years ago. However, today, with more sophisticated drafting of agreements and as a result of recent, flawed, pro-business Supreme Court decisions, courts routinely enforce such agreements, despite the existence of one-sided provisions which unfairly tilt the playing field in favor of the stronger party. With a lack of meaningful consent, which is supposed to be the theoretical and legal basis for arbitration, and with the disappearing judicial scrutiny of arbitration clauses, America’s judiciary is now sending people into a sham system. Courts today are in effect rubberstamping whatever one-sided, harsh arbitration language companies are inserting into their contracts.

In pushing its arbitration agenda, the Supreme Court has been relying on the 1925 Federal Arbitration Act. Unfortunately, the Supreme Court, since the 1980s, has been re-writing and grossly expanding this statute far beyond its original intent. The statute was originally designed to cover commercial, contractual disputes and apply solely in federal court proceedings. However, since the 1980s, the Supreme Court has twisted the statute and held it applies in state and federal courts and covers employment and statutory disputes. Through these flawed rulings, the Supreme Court is unconstitutionally eroding and displacing the power of the states to create their own systems of dispute resolution. Also, the Supreme Court is sending critical statutory claims of a public nature, such as civil rights claims and wage claims, into a secretive system, thereby destroying the creation of precedent, which is fundamental to our common law legal system. Congress never intended the federal arbitration statute to have these effects.

It’s a shame the Supreme Court has hijacked and corrupted arbitration. Through arbitration, consenting parties can design their own procedures to resolve disputes and take ownership and control over resolving their own claims. Arbitration, when used as intended, respects party autonomy and promotes democracy. Furthermore, arbitration, when based on meaningful consent between parties, has served virtually every society going back to the beginnings of recorded history. For example, merchants and trade groups in New York have successfully used arbitration to resolve disputes in an efficient manner, and arguably with better results from knowledgeable, respected, agreed-upon decision makers, from pre-Revolutionary War days continuing to the present time. When the British occupied New York City during the Revolutionary War, the New York Chamber of Commerce’s arbitration system was the sole functioning tribunal for disputes in the city.

The recent New York Times articles fail to recognize that the problem is not with arbitration. When used as intended, arbitration can be invaluable and fits perfectly with our democratic values as a society. The problem is with the Supreme Court’s tortured, flawed readings of the federal law governing arbitration and corporate America’s abuse of arbitration. Together, a majority of the Court and corporate America have perpetrated one of the greatest cons on the American people, who are often unaware that their constitutional rights have been stripped away.

KTNV reported the settlement between Nevada and the family of Dr. Bob Robinson, a former state lawmaker. Nevada officials are paying $400,000 to the family of an Alzheimer’s patient who died after being allowed to exit Nevada State Veterans Home nursing home in sweltering heat. Robinson was unsupervised when he maneuvered his wheelchair onto an outdoor patio at the Nevada State Veterans Home on July 15, 2013 and got stuck. Staff later found him with third degree burns and heat stroke, and he died two weeks later at age 89.

The family sued, saying the state was deliberately indifferent to Robinson. The Nevada Board of Examiners voted Tuesday to settle with the family of Dr. Bob Robinson. Gov. Brian Sandoval, who’s on the board, called the case “horrific” and said he’s apologized to the family.

The Morning Call reported the horrific case involving a vulnerable nursing home resident being sexually molested by a caregiver. CNA Diane Wilson told a Lehigh County jury that she never saw a nurse touch a patient the way Robert Poindexter was allegedly touching a 50-year-old woman at Manor Care in Bethlehem on May 31, 2013. Wilson is a the prosecution’s key witness in their case against Poindexter who is charged with several counts of aggravated indecent assault.

“I walked in and he was down on his knees,” Wilson said, describing Poindexter’s alleged hand movements. “I saw what he was doing and I just bugged and ran out of the room.”

The victim came to the nursing home in 2011 after suffering a brain aneurysm. She cannot speak and has very limited movement in her left arm and head. Because of this, staff placed a call button near her head so that she can roll onto it when she needs something, Wilson said. Wilson testified that she saw the call light go on and went to the woman’s room. The door was suspiciously closed. Wilson told the jury that she opened the door and was immediately surprised to see the woman’s bed in a flat position and lowered. The woman has a feeding tube, she explained, and needs to be upright at all times due to the risk of aspiration.

She said she got close enough to look over Poindexter’s should and saw the woman’s gown pulled up and diaper pulled down as he touched her.

“That’s what spooked me. I ran out,” she said. Wilson told the jury that she was crying and hyperventilating after seeing the alleged crime. “I was upset. I know what I saw,” she said. Wilson said she started crying and telling other nursing assistants what she saw, then began looking for her supervisor. Poindexter got to the supervisor first, she said, and told his side of the story.

Poindexter explained that he was on his knees because he had a back spasm while caring for the woman.

As Wilson described the alleged sex assault, the woman’s husband wept quietly in the courtroom audience.

McKnight’s had an article on the recent decision of the Pennsylvania Supreme Court on an arbitration issue involving National Arbitration Forum. Last month’s ruling in Wert v. ManorCare of Carlisle rendered arbitration agreements that rely solely on the National Arbitration Forum unenforceable since the NAF is no longer able to accept arbitration cases. The NAF has been unable to handle arbitration disputes since it entered into a consent decree with the Minnesota Attorney General’s Office in 2009. Many nursing homes have accepted the Minnesota consent decree and have stopped listing exclusive arbitrators in their contracts, so the court’s ruling will affect a relatively small portion of nursing home arbitration contacts.

The justices were split on whether the Federal Arbitration Act was enough to sustain agreements that listed NAF as the exclusive arbitrator. “The justices recognized there’s a ‘lopsided balance of power’ between sophisticated business entities, such as nursing homes and their parent companies, and the residents that they deal with,” said Stephen Trzcinski, who represented plaintiff Evonne Wert in the case.

Wert v. ManorCare of Carlisle concerned a suit filed by Wert after the death of her mother at a ManorCare facility in Gettysburg, PA. Wert’s suit alleged that her mother’s death was due to abuse and neglect by the facility.

“We found that rudeness damages your ability to think, manage information, and make decisions,” said Amir Erez, an author on the study and a Huber Hurst professor of management at the University of Florida. “You can be highly motivated to work, but if rudeness damages your cognitive system then you can’t function appropriately in a complex situation. And that hurts patients.”

Rudeness has dramatic negative effects including struggling to cooperate, communicate, and do their jobs effectively, all of which caused their performance to plummet: They misdiagnosed the illness; they forgot instructions; they didn’t ventilate the patient well; they didn’t resuscitate well; they didn’t ask for help when they needed it; doctors asked for the wrong medication, and nurses mixed the wrong medication. Overall, the rude comments appeared to cause a 52 percent difference in how well teams diagnosed the disease, and a 43 percent difference in how well they treated it. In the real world, as Erez pointed out, these performance discrepancies could have made the difference between the tiny patient living and dying.

When disruptive behaviors cause these mental resources to fail, medical teams are putting patients at risk because they are physically unable to focus past the rude comment. These doctors and nurses are making mistakes, and then they can’t recognize or adapt to those mistakes. And as a result, the study authors suggest, rudeness could contribute to many of the preventable deaths caused by medical error in U.S. hospitals each year, which, according to a Journal of Patient Safety study, is between 210,000 and 440,000 people.

Erez and Porath both say that hospitals need to take a more aggressive stance against rude behaviors among medical staff, and doctors need to consider the long-term effects of acting rudely toward one another. Because, as it turns out, these everyday slights could be catastrophic for patients.

Forced arbitration rigs the game in favor of big corporations and against consumers and employees. And recently, a New York Times investigation has exposed just how prevalent this damaging practice is; indeed, the story almost certainly affects you, personally.

If you’ve ever opened a credit card, rented a car, or engaged in any number of other routine interactions with big corporations, you’ve probably had to sign away your right to go to court, or band together in a class action with other customers. Instead, you have legally (if unwittingly) agreed that, if a dispute occurs, you will seek justice only through a secret, profit-driven arbitration process — one in which no comprehensive records are kept, no meaningful appeals are allowed, and the arbitrator likely has significant financial incentive to rule in favor of the corporation.

That arbitration clause was likely buried deep in the fine print in a lengthy terms-of-service agreement. Even if you had read (and correctly interpreted) the entire contract, and decided to take your business elsewhere, odds are you would have seen the same clause in every competing company’s terms-of-service agreement, too. Consumers are left with no real recourse: you sign, or you do without a cell phone, or cable TV, or Internet service.

Now, imagine facing the same dilemma when placing a loved one in a nursing home — or even looking for a job. Believe it or not, more than 30 million American workers are bound by forced arbitration clauses as a condition of their employment.

Make no mistake: These clauses, which are practically impossible to avoid, are designed to make it easier for big corporations to break the law and rip you off without facing any real consequences. It’s unbelievably unfair. And it shouldn’t be legal.

That’s why we have introduced the Arbitration Fairness Act, which has been co-sponsored by 16 Democrats in the Senate and another 74 in the House. Our legislation doesn’t ban arbitration. If both parties want to arbitrate instead of going to court, they can. But you would get to make that decision after a dispute arises. Corporations wouldn’t be able to force you to preemptively waive your right to go to court or pursue a class action — often your only real avenue for holding these giant companies accountable.

Congress isn’t the only place where we can level the playing field. Earlier this month, the Consumer Financial Protection Bureau (CFPB) announced it was considering a proposal to ban arbitration clauses that block class action lawsuits in consumer financial contracts. While we would like to see the CFPB go further and eliminate the use of forced arbitration clauses altogether in consumer financial service contracts, this proposed rule would be a big win for consumers.

Meanwhile, the Centers for Medicare and Medicaid Services (CMS) has proposed reforming its requirements for long-term care facilities like nursing homes, acknowledging the negative impact of these clauses on residents and suggesting some ways to make these clauses more transparent and easier to understand. That is a start. But forced arbitration clauses have no place in these agreements, and we urge CMS to ban them altogether.

We are hopeful that these processes will result in real progress for consumers. But the law requires that any CFPB proposal must undergo an arduous review before being finalized and implemented, and CMS, which has already received thousands of comments on their relatively modest proposal, will likely engage in a lengthy rulemaking process, as well. And that leaves plenty of room for the Chamber of Commerce and other corporate-backed pressure groups to make their mark. It’s up to ordinary Americans everywhere whose rights are at stake to weigh in, as well.

There’s one more arena where this fight will play out: the Supreme Court. After rulings this summer to protect health insurance subsidies and make marriage equality the law of the land, many thought that perhaps concerns about the Roberts Court’s conservative bent were overblown.

But, as the Times revealed, Roberts himself was a driving force behind the creation of the forced arbitration scheme a decade ago. And in a long series of 5-4 decisions, including the two that paved the way for these unbelievably unfair forced arbitration clauses, he and the other members of the Court’s conservative majority have systematically slammed shut the courtroom door on millions of Americans.

These cases may not garner the same headlines as those involving public displays of religion or government surveillance, but they affect the rights, and the pocketbooks, of nearly all of us — something to keep in mind when evaluating not just the current Court’s record, but also future nominees.

Americans are beginning to understand that the game is rigged. Now we must take action to level the playing field.

McKnight’s had an article on two psychologists charged for billing Medicare $25 million for psychological tests on nursing home residents that were either unnecessary or never provided. Beverly Stubblefield, Ph.D., and John Teal, Ph.D., owned two psychological services companies that contracted to nursing homes in Louisiana, Mississippi, Alabama and Florida.

Stubblefield and Teal, along with other clinical psychologists employed by their companies, allegedly provided psychological tests and other services to nursing home residents that weren’t necessary, and in some cases, never provided.

Between 2009 and 2015, the companies submitted more than $25.2 million in claims to Medicare, according to the U.S. Department of Justice. Medicare has reportedly paid $17 million of those claims.

Stubblefield and Teal, along with two other defendants, were charged with conspiracy to commit healthcare fraud and conspiracy to make false statements related to healthcare matters. The case is being handled by the Medicare Fraud Strike Force.

The Springfield News-Leader had the below article about forced arbitration and a proposed legislative fix to the injustice.

The Arbitration Fairness Act of 2015, recently introduced into the Senate, is a long overdue legal change which would prevent employers from requiring people to give up their constitutional rights in order to get hired. Many Americans have unknowingly agreed to give up those rights and submit any disputes to binding arbitration, usually because these provisions are buried in the fine print. The AFA would prevent those kinds of hidden provisions.

The Bill of Rights to both the United States Constitution and the Missouri Constitution specifically state that the right to trial by jury shall be preserved. The Framers did that because they knew that a fair legal system must have an impartial and objective decision-maker. While arbitration sounds good in concept, when applied to employee claims it is deeply flawed and unfair to the employees, because the deck is stacked against them.

The biggest problem is that arbitrators can’t be objective, because they have their own competing financial interests. The employer gets to pick the arbitrator, and the arbitrator knows that they won’t get hired next time if they rule against the employer today. The need to shield decision-makers from this kind of financial pressure is exactly why the Founding Fathers wrote in our Constitution that federal judges are appointed for life and that their pay can never be reduced (Bill of Rights, Art. III, Sec. 1). Those safeguards don’t exist in binding arbitrations.

Second, in arbitration there is usually no requirement that the arbitrator have any legal training or that they follow the law. It seems absurd to think someone who’s unfamiliar with the law can intelligently or adequately decide a legal dispute, yet that frequently happens.

Third, there is no way to appeal an arbitration decision, so mistakes can never be fixed. In our court system, appellate courts provide a safeguard to fix a judge’s mistakes. That oversight doesn’t exist in arbitration.

Last, there are no rules in arbitration. Unreliable evidence can be used, and witnesses can be sprung with no advance notice. Our court system’s rules of procedure and evidence, developed over hundreds of years to impart fairness and predictability, simply don’t apply.

Employers defend arbitration by claiming that the employee agreed to it. The simple truth, though, is that the average employee has no idea what binding arbitration is, or how unfair it is in practice, until after a dispute arises and they consult with a lawyer.

In short, employers use binding arbitration provisions because they want to make sure it’s not a level playing field, and because they fear the extraordinary power that 12 ordinary citizens are vested with under our Constitution.

Only Congress can rectify this injustice. The time has come for Congress to outlaw forced arbitration for America’s workers. The Arbitration Fairness Act should be passed, making binding arbitration agreements enforceable only if entered into after a dispute arises, not before.

CTV News and KelownaNow reported that vulnerable adults living in private for-profit nursing homes are more likely to die within six months of their stay than those living in non-profit facilities, a group of researchers has found. A recent study by the Institute for Clinical Evaluative Sciences (ICES) found that for-profit seniors’ homes have a 16 per cent higher death rate for seniors within six months of arrival, and that there is a 33 per cent greater likelihood that they’ll end up in hospital.

“Those are not trivial numbers,” said Dr. Peter Tanuseputro, a researcher behind the study. “If there’s a way that we can get to the bottom of this and correct it, we could potentially be preventing many, many hospitalizations and potentially many deaths.”

One researcher suggests it may have to do with the staff-to-senior ratio or understaffing. “A lot of the research finds that for-profit facilities actually hire fewer staff. One can’t help but ask [if that is] because more staff affects the bottom line,” said Dr. Margaret McGregor, a family physician and researcher at the University of British Columbia. The difference in numbers calls into question why both long-term care facilities receive the same subsidy from the provincial government, and how both must meet the same guidelines for care.